"No Inflation" Friday: The Dollar Has Lost 83.3% Against...

Tyler Durden's picture




 

Submitted by Simon Black of Sovereign Man blog,

I needed a caffeine jolt late this morning after the long journey up from South America.

And while I’m generally averse to aspartame, high fructose corn syrup, and other government-sanctioned poisons, I did briefly consider a hit of Coca Cola as I walked past a vending machine on my way out of a grocery store.

Then I saw the price.

To give you some quick background, this was the same grocery store my mother used to shop at when I was a kid. And if I was really lucky, we’d stop for a can of coke on the way out– 25 cents back then.

Fast forward to today–. I’m a grown man of 35 now instead of a 9-year old kid. And while the store has changed hands a few times, there’s still vending machine near the entrance.

Same coke, same 12 ounces (though now in a plastic bottle instead of an aluminium can).

Price today? $1.50. [note, this is the vending machine price, not grocery store price.]

Put another way, $1 would have bought me 48 ounces of Coca Cola 26 years ago. Today that same dollar buys me just 8 ounces.

This means that the dollar has lost 83.3% of its value against Coca Cola over the past three decades, averaging roughly 6.6% inflation per year.

Some readers may remember the price of Coca Cola being just 5c back in the early 1950s (for a 6.5oz glass)… meaning the US dollar has lost 93.8% against Coca Cola over the past six decades.

Now, we are taught from the time we are children that ‘a little inflation is good…’

And when central bankers tell us they’re targeting an inflation rate of 2% to 3%, that certainly doesn’t seem so bad. 2% is practically just a rounding error. But bear in mind a few things–

1) An inflation rate of 2% is not price stability.

As Jim Rickards frequently points out, even with just 2% inflation, a currency loses over 75% of its value during an average lifespan. This can hardly be considered monetary stablilty.

And this practice of gradually plundering people’s purchasing power over time is incredibly deceitful.

2) Even if, they rarely meet their target.

As this case shows, 6.6% certainly ain’t 2%. The official statistics and research papers may say 2%. Reality is much different.

3) Wages often don’t keep up.

According to the US Labor Department, the median weekly wage back in 1988 was $382… or roughly 18,336 ounces of Coca Cola.

Today the median weekly wage is $831.40… or just 6,651.20 ounces.

So as measured in Coca Cola, the average wage in the Land of the Free has declined by 11,684 ounces per week– a 63.7% decline over the last three decades.

You can make a similar calculation denominated in Snickers bars, gallons of gas, etc.

If you have a big picture, long-term view, it’s clear that standard of living is falling.

Some readers may remember decades ago– a single parent could go out and, even with a blue collar job, comfortably support a growing family.

Today, dual income households struggle to keep their heads above water. This is the long-term plunder of inflation.

And just to give you a reminder of what things used to cost, I’ve pulled a page from the March 7, 1988 edition of the Bryan Times of Bryan, OH: 26-years ago today.

inflation federal reserve No inflation Friday: the dollar has lost 83.3% against...

You can scroll through the paper and note the prices:

25c for a dozen eggs. 69c for a loaf of bread. 49c for a pound of Chicken. A brand new Mustang LX for just $9203.

That’s the Federal Reserve for you. 100 years of monetary destruction and counting.

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Fri, 03/07/2014 - 18:21 | 4523095 tahoebumsmith
tahoebumsmith's picture

How about the gallon of milk I bought last night for $4.99?

Fri, 03/07/2014 - 18:23 | 4523103 James_Cole
Fri, 03/07/2014 - 18:42 | 4523179 The Gooch
The Gooch's picture

That shit will kill you quicker than bourbon.

Fri, 03/07/2014 - 18:49 | 4523209 lordylord
lordylord's picture

Read Ron Paul's End the Fed.  Incredibly written and easy to understand.  INFLATION IS THE MOST DEVIOUS TAX OF THEM ALL!  Too bad your average American can't understand that.

Fri, 03/07/2014 - 19:00 | 4523252 fonestar
fonestar's picture

How many satoshis was that in 1988?  fonestar does not compute.

Fri, 03/07/2014 - 19:29 | 4523324 AmericasCicero
AmericasCicero's picture

you know what? - ill upvote cause I still laughed.

Fri, 03/07/2014 - 19:40 | 4523364 National Blessing
National Blessing's picture

Read my lips.  No new taxes.  Bitches.

Fri, 03/07/2014 - 19:57 | 4523412 tmosley
tmosley's picture

Sorry, the ZH comment section is now firmly pro-Fed.

You'll have to sell your wares elsewhere, Simon.

Fri, 03/07/2014 - 20:21 | 4523470 Clowns on Acid
Clowns on Acid's picture

Read Satoshi's lips - No new BitCoin

Fri, 03/07/2014 - 20:23 | 4523474 fonestar
fonestar's picture

+100

Fri, 03/07/2014 - 19:01 | 4523255 NotApplicable
NotApplicable's picture

WARNING!

SOCK-PUPPETS HAVE INVADED THIS THREAD.

details below...

Fri, 03/07/2014 - 19:29 | 4523321 666
666's picture

When I was a kid, Coke from a vending machine came in a glass bottle, tasted real good, and only cost 10 cents. I don't drink any soda anymore primarily because they taste like adulterated puke.

Fri, 03/07/2014 - 19:33 | 4523339 LetThemEatRand
LetThemEatRand's picture

Have you tried puke classic?  

Fri, 03/07/2014 - 19:53 | 4523402 The Gooch
The Gooch's picture

PUKE II.

The grand deception.

 

Fri, 03/07/2014 - 20:06 | 4523443 Greenskeeper_Carl
Greenskeeper_Carl's picture

i occasionally really enjoy a coke. Go to the ethnic foods section of your local grocery store and by the glass bottles of coke or pepsi that say 'hecho in mexico' on them. No high fructose corn syrup, made with real sugar. Still not good for you, but it is delicious. and you pay about twice as much for it. I spent a year in the middle east, a good while ago, mostly on a boat out of bahrain, and everyone liked the 'hajji coke' better, and got pissed off when the cook bought american made coke to the boat, becuase the hajji coke was made with real sugar too. Everyone wanted the coke with arabic writting on the can, which still had the old style peal off top. True story, I noticed how much better it tasted, looked into the whole sugar/ high fructose corn syrup/ sugar tarriffs thing, and pretty much stopped drinking soda when I got back, aside from the occasional mexican kind

Sat, 03/08/2014 - 00:14 | 4524163 Curiously_Crazy
Curiously_Crazy's picture

The US really seems to be an exception in terms of it's using high fructose corn syrup. Everywhere I've been (which granted only consists of several countries) always uses 'real sugar' - in fact it's sort of funny seeing it written in that way because everyone I know couldn't concieve of anything but 'real sugar' (the aspartame crowd aside).

Fri, 03/07/2014 - 18:47 | 4523210 NotApplicable
NotApplicable's picture

In other news, I learned that Simon is only 35. That explains a lot, and perhaps I'll give him a little slack.

Fri, 03/07/2014 - 19:04 | 4523261 J S Bach
J S Bach's picture

Inflation is a major way the legal counterfeiters (The Fed) get their interest on debt-based currency.  It's simply an insidious hidden tax which affects the little guy more than anyone else.  As long as we have this usurious system, inflation will be ever-present.

Fri, 03/07/2014 - 22:30 | 4523880 Portuguese Revo...
Portuguese Revolutionary's picture

+10000000

I just wonder, Americans are always thinking "What would Jesus do?" and I think they don't remember the story about how He kicked the money-changers' asses...

Sat, 03/08/2014 - 09:16 | 4524656 Badabing
Badabing's picture

I can't find T shirts that have a pocket anymore, get less for more!!

Fri, 03/07/2014 - 19:05 | 4523266 fonestar
fonestar's picture

fonestar's PAL is only 35 but he is very wise.

Fri, 03/07/2014 - 18:48 | 4523212 johnQpublic
johnQpublic's picture

notice bananas are the only thing that has stayed relatively constant

3lb for .99 then, .39 a pound on sale at wegmans now

they sell them at a loss according to the produce manager

Fri, 03/07/2014 - 20:54 | 4523591 cossack55
cossack55's picture

Since the plutonium/uranium accident at WIPP in NM (ongoing), they are now disposing of radioactive waste in bananas.  

Sat, 03/08/2014 - 02:22 | 4524367 Dr. Sandi
Dr. Sandi's picture

I thought that's what fracking was for.

Sat, 03/08/2014 - 14:26 | 4525285 A Nanny Moose
A Nanny Moose's picture

Bananas are plentiful in this Republic.

Fri, 03/07/2014 - 18:34 | 4523149 12ToothAssassin
12ToothAssassin's picture

Raw milk is $9.99 for a half gallon.

Fri, 03/07/2014 - 18:45 | 4523195 Dr. Destructo
Dr. Destructo's picture

A dozen free-range eggs directly from the farm costs $10 here.

Sat, 03/08/2014 - 01:03 | 4524283 Dr. Sandi
Dr. Sandi's picture

Sitting here munching my Lay's Sour Cream & Onion potato chips. Looking at the 1 LB. bag which is now 9 1/2 ounces. Remembering when same brand was 69 cents and the 1 LB. bag had...

16 ounces of chips. Of course, that was 1960. They were Lay's New Era Potato Chips of Detroit, recently acquired by Lay's. If I remember, that was before their liason with the Frito Bandito.

This rounds up to $7.23 a pound vs. $.69 a pound. That's 54 years or so. But this is friggin potato chips, the basis of any well rounded Yankee diet. That's only 10.4x the old price.

And I really think it's a much closer measure of real inflation than a lot of the crap the boyz are feeding us.

 

Fri, 03/07/2014 - 18:35 | 4523154 MeMadMax
MeMadMax's picture

Yes, prices are rising, but there are anomalies:

Last night I bought 4, 2 liter bottles of pepsi for 79cents each.

This applies to coke as well. 

It depends on which bottle you buy and where you buy it as far as soda is concerned.

 

I still remember the days when gas was 89 cents a gallon, and I'm only 32...

Everytime I fill up I get pissed.... Makes for a stressful day... >_>

 

Fri, 03/07/2014 - 20:17 | 4523462 Greenskeeper_Carl
Greenskeeper_Carl's picture

nothing like saying "lets go over there honey, gas is only 319 a gallon....ah fuck

Sat, 03/08/2014 - 14:46 | 4525334 frenzic
frenzic's picture

You have room to spare. We are @ $9.712/gal for the good stuff.
http://www.wolframalpha.com/input/?i=1.849+euros+per+liter+in+dollars+pe...

Fri, 03/07/2014 - 20:41 | 4523548 AlaricBalth
AlaricBalth's picture

I can recall .29 cents at the Sinclair station in central Florida circa 1960's.
On weekends Dad would would take us for a Sunday drive. We would just cruise amongst the lakes and orange groves in his rag top T-Bird around pre Disney Orlando. After stopping for ice cream we would make it home on time to catch Batman on TV, in color.

Fri, 03/07/2014 - 18:56 | 4523240 mophead
mophead's picture

"Probably has nothing to do with this"

That's not it. In the US we pay farmers to kill their cows. Reason? Too much milk production. We burn corn in cars. Excuse: environmentalism. Real reason: over production. When there are more goods chasing fewer buyers, what happens? We get deflation. In reality, we should experience deflation, year after year due to increases in productivity, which is made possible through innovation, etc. The Fed exists to not let that happen.

 

Fri, 03/07/2014 - 20:15 | 4523457 Greenskeeper_Carl
Greenskeeper_Carl's picture

that is a very interesting perspective. Never heard that suggested before. I have always thought about how stupid it was to put corn in our gasoline, which serves to make corn more expensive, which drives up food(especially meat) prices across the board, and all for the whole climate change farce, even though it has been known for a while now this doesnt actually help. Things that make you go hmmm. Can't have deflation, though. It may make your dollar worth more, but it makes the govt debt less easy to service, which might as well mean: Fuck you, serf

Sat, 03/08/2014 - 00:59 | 4524277 WOAR
WOAR's picture

Here's a demotivator shirt waiting to happen:

 

Banking

Go fuck your serf.

Fri, 03/07/2014 - 20:42 | 4523556 Clycntct
Clycntct's picture

"We burn corn"

Exploding my head with that thought.

 It's not only that but if at every turn we see any issue the .gov promos we see abject failure.

It's painful to have been part of this country.

Fri, 03/07/2014 - 20:36 | 4523525 Rikeska
Rikeska's picture

Do tell.

Wed, 03/12/2014 - 19:13 | 4540790 rickv404
rickv404's picture

 

No, population increase certainly has nothing to do with it. On the contrary. If we had zero inflation (meanng a gold standard) you'd be paying LESS for everything than you were in 1988, and an increase in population would help make that possible, in fact. That's the beauty of capitalism; the more people you have, the greater your economy. No, you are paying more because of  - Medicare Part D, No Child Left Behind, TARP and other bailouts, Bush and Obama's "stimulus" packages, mortgage deduction, Cash for Clunkers, dramatic increase in food stamp expenditures, unemployment compensation and extensions of unemployment compensation, Hurricane Sandy pork, Farm bill, wars in the Middle East, and, worst of all, Obamacare, which is only getting started. I'm sure I've left something out, but how do you think all these recent increases in government spending are being financed? 

 

Fri, 03/07/2014 - 18:25 | 4523110 northerngirl
northerngirl's picture

How about a pound of hamburger?

Fri, 03/07/2014 - 18:35 | 4523157 McMolotov
McMolotov's picture

How about a pound of soylent green?

Fri, 03/07/2014 - 18:46 | 4523201 Dr. Destructo
Dr. Destructo's picture

A pound of flesh plz.

Fri, 03/07/2014 - 20:00 | 4523421 tmosley
tmosley's picture

I actually started eating Soylent.  It's pretty good.

http://robrhinehart.com/?p=298

Fri, 03/07/2014 - 18:28 | 4523120 Cattender
Cattender's picture

Gas was UNDER $3 a Gallon here at X-Mas NOW $3.79 Here in Michigan.. the RECOVERY Continues...

Fri, 03/07/2014 - 18:43 | 4523186 The Gooch
The Gooch's picture

You were conditioned to think $3 was fair.

Fri, 03/07/2014 - 19:31 | 4523331 AmericasCicero
AmericasCicero's picture

Im early 20's and EVEN I remember under $2

Fri, 03/07/2014 - 18:31 | 4523133 NOTaREALmerican
NOTaREALmerican's picture

Re:  How about the gallon of milk I bought last night for $4.99?

Oh sure, but that's offset by the automotive bling you can buy with 3% autoloans.

I'd like to see Simon Black go back in time and find when a member of the Trash Class could buy the equivalent to the Chrysler 300, with tinted windows, extra loud exhaust, and oversized tires to prove what a large dick the driver has.

Who needs cheap milk when you've got a Chrysler 300.

Fri, 03/07/2014 - 19:15 | 4523288 FinalCollapse
FinalCollapse's picture

The next model will be Chrysler 30,000.

Fri, 03/07/2014 - 20:01 | 4523425 tmosley
tmosley's picture

6000 SUX, you mean.

Sat, 03/08/2014 - 13:41 | 4525163 Dave Thomas
Dave Thomas's picture

I'd buy that for a dollar!

Sat, 03/08/2014 - 10:16 | 4524724 TeMpTeK
TeMpTeK's picture

I pay 4.29 for a 1/2 gallon of 2% organic.......apparently its more expensive to not put chemicals in it... 

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